(i) NRIs/OCBs are permitted to invest in priority industries (industries included in Annexure III to Ministry of Industries Press Note No.14(1997 Series) dated 8th October 1997 and Indian Companies primarily engaged in exports trading activity, with full repatriation benefits upto 100% of the new issue of shares. Reserve Bank vide its Notification No. F.E.R.A. 180/98-RB dated 30th January 1998 ( as amended upto 14th July 1998) has granted general permission under section 19(1) and 29 (1)(b) of FERA 1973 to Indian Companies for issue and export of equity shares to NRI/OCB investors in respect of the eligible investment. Indian companies seeking investment from NRIs/OCBs under the Scheme and satisfying the conditions laid down in the said Notification may issue equity shares to NRIs/OCBs without prior approval of Reserve Bank and file a declaration in form ISD(R) togethewith the required documents with the concerned Regional Office of Reserve Bank, under whose jurisdiction their registered office is situated , within 30 days from the date of issue of shares. The scheme is open to new industries as well as for expansion /diversification of existing industrial undertakings. The company, existing in the date of the above Notification, which is not engaged in the Annexure(III) activities will also be eligible to issue shares if it embarks upon expansion programme predominantly in the Annexure III activities, subject to the condition that the equity raised by issue of equity shares to non-resident investors is utilised for such expansion.

NOTE: In terms of Reserve Bank Notification dated 13th January 1998 referred to above, the general permission does not cover investment by -

(a) Persons who are citizens of Pakistan, Bangladesh or Sri Lanka

(b) Companies incorporated in Pakistan or Bangladesh.

(c) The company being -

(i) manufacturer of items reserved for small scale sector;

(ii) unit manufacturing items which require Industrial Licence;

(iii) unit manufacturing any item of aerospace and defence equipments whether specifically mentioned or not;

(iv) unit manufacturing any item related to production or use of atomic energy including carrying out of any process, preparatory or ancillary to such production or use , under the Atomic Energy Act, 1962; and
(v) 100% Export Oriented Units and unit in Export Processing Zone

(ii) Since the general permission referred to sub-paragraph (i) above does not cover investment by individual NRIs in partnership firms , applications for necessary permission for seeking such investment should be made to Reserve Bank, Central Office, Mumbai in form in form ISD(R) by the non-resident investor or the Indian firm proposing to invite the investment.

(iii) Applications for foreign investment which does not satisfy the parameters prescribed for the general permission as laid down in the Reserve Bank Notification dated 13th January 1998 as amended upto 14th July 1998 referred to above or in 100% Export Oriented Units are required to be made to the Secretariat for Industrial Assistance ( SIA) / Foreign Investment Promotion Board (FIPB), as the case may be . If the unit is located in any of the Export Processing Zones, applications should be made to the Development Commissioner of the Export Processing Zone concerned.

(iv) With a view to simplify the procedure in respect of the proposals approved by SIA/FIPB, Reserve Bank , vide its Notification No. F.E.R.A. 182/98-RB dated 10th February 1998 has granted general permission under Section 19 (1) and 29 (1) (b) of FERA 1973 to Indian Companies for issue and export of shares /securities to foreign investors in respect of investments approved by SIA/FIPB . As a result of the general permission,. Indian Companies seeking foreign investment from NRIs/OCBs under the Scheme based on the approvals granted by SIA/FIPB and satisfying the conditions laid down in the Notification will not require any prior clearance of Reserve Bank. Such Indian Companies may issue shares/securities to foreign investors and file a declaration in form ISD together with the required documents with the concerned Regional Office of Reserve Bank under whose jurisdiction the Registered Office is situated, within 30 days from the date of issue of shares/securities to foreign investors.